Good article showing passive funds from VG and DFA outperforming active from Russell. In today’s environment of high US equity valuations and low interest rates, expected returns are modest. Active funds are unlikely to give increased returns. Increasing international and emerging equity exposure and tilting to small and value much more likely to be productive.
I would also add that with a strong tilt to size and value, one can target a specific expected return with a significantly lower overall exposure to the market factor and greater exposure to term and quality on the bond side. This creates a more efficient portfolio, diversified across different sources of return, a move in the direction of risk parity.

I would also add that with a strong tilt to size and value, one can target a specific expected return with a significantly lower overall exposure to the market factor and greater exposure to term and quality on the bond side.

Targeting a specific expected return gives a sense of too much precision in forecasting future returns. I prefer: targeting a riskier portfolio with the hope that it yields higher returns, with both future risk and return values left unspecified.

Rkhusky,
I agree that using specific numbers leads to a sense of accuracy that can be misleading. There is a WIDE dispersion of potential outcomes. I use that terminology in an attempt to clarify the trade offs: more of a higher expected return asset class, less overall equity exposure, more bonds, likely smaller SD, likely higher Sharpe ratio, likely smaller maximal loss, likely more eficient portfolio.

This article continues to hit home on probably the biggest remaining thing I think about as far as potential ongoing portfolio adjustments to make over time (aka, valuation based decision making). Given that nearly everyone agrees that higher valuations leading to lower expected returns, the idea that one could tilt away from US to international where valuations are much lower is highly enticing. But my challenge in readily accepting doing so is I just don't see any literature backing up this being a reliable strategy. I have a Paul Merriman style size/value tilted portfolio so I am not a straight three fund person (even though I would recommend that to practically anyone I know, I just have a personal need to be "more involved"). But with the factor tilting, whether someone agrees with it or not, it is not really disputable that there is at least a good evidence based story to consider that strategy. Larry had a big influence on my portfolio strategy. So it is almost surprising to see valuation based tilting recommendations like this from him without all of the massive evidence to support the recommendation which usually accompanies his advice.